CP45 Notice: Your Refund Was Applied to a Tax Debt

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If you received a CP45 Notice from the IRS, it means that they can’t apply your refund to your estimated taxes as you requested. Instead, they will apply your refund to a previous tax debt.

How can you verify a CP45 Notice?

You will only receive a CP45 Notice if you owe the IRS money. In most cases, you should know that you do.

Your notice will look like this example on the IRS website. You can also go to irs.gov and look up the phone number to call. Never call the phone number on a notice you aren’t sure about, because if it’s a fake, the number will go to the scammers.

What’s the difference between a CP45 Notice and CP49 Notice?

These two notices are almost exactly the same except for what you wanted to do with your refund. If you wanted a check or direct deposit, you’ll receive a CP49 Notice. If you wanted your refund applied to future tax bills as an estimated tax payment, you’ll receive a CP45 Notice.

What can you do if you owed the IRS money?

If you owed the IRS money, there’s not much you can do. The IRS applies refunds to past tax debts first. You will need to make a separate estimated tax payment specifically marked as for the current year.

You should also request a tax transcript or check your IRS account online to see if you still owe money. If you do, you’ll probably want to pay off the balance or set up a payment plan. Interest and penalties will keep accruing if you wait for them to take your refund in future years.

You will not be able to apply your refunds to estimated taxes until your past tax debts are paid in full.

What can you do if you didn’t owe the IRS money?

If you didn’t owe the IRS money, you should immediately call them, request your account transcript, or view your account online to see what year they say you owed for.

Potential reasons for an unexpected CP45 Notice include:

  • IRS errors.
  • The notice is a fake.
  • Someone filed a fraudulent tax return under your information.
  • You never received previous notices or letters from the IRS telling you that you owed additional tax.

Your options will vary based on what caused the CP45. You don’t fight the CP45 directly but instead have to challenge whatever caused the tax debt.

Conclusion

When you owe money to the IRS, they will almost always take your tax refunds until you pay them in full. If you think you didn’t owe money, contact the IRS as soon as possible to find out why they say you do.

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